We all know the rule about things that sound too good to be true. So how much
will a £1 home really cost the buyers in the end?

A family home: yours for a pound. It sounds like a joke, a satire on the current cost of British housing, but it is really happening. First in Liverpool, and now in Stoke-on-Trent, buyers are picking up run-down council-owned properties for the price of a loaf of bread and a pint of milk.

Or rather: sort of. It will not come as a surprise to hear that the £1 price is not quite the final expenditure buyers face. Designed to revive the fortunes of some of the country’s most struggling areas, the scheme requires the new owners to take care of their cut-price asset.

Though no deposit is necessary, owners will have to pay back the cost of renovating the property: up to £30,000. At roughly £293 per month for 10 years, however, this is much cheaper than a mortgage and better value than renting. The cost goes towards ensuring the house you move into will have a kitchen, a bathroom and wiring, all installed by council-approved-and-appointed contractors.

The first owner, in the Granby district of Liverpool, is 48-year-old taxi driver Jayalal Madde. He described picking up the keys to his new home as “like winning the lottery”. He and his family are moving from their ground-floor flat in nearby Toxteth.

“I am delighted,” says Jayalal. “It was always my dream to own my own house. I have been saving up for years, trying to get loans and a mortgage. We can’t wait to move in.”

In Liverpool the scheme was fast-tracked after an agreement with a private developer to renovate the area fell through.

“Mayor Joe Anderson and I decided we had to come up with a creative solution,” says Ann O’Byrne, the city’s cabinet member for housing. “The house-for-a-pound scheme idea was suggested, and the Mayor made it happen.”

Other authorities are following suit. Rachel Roberts, 31, has paid £1 for a two-bedroom house in Cobridge, Stoke-on-Trent.

“I live with my parents at the moment, but when I move in, I will share with a friend, which will help with the rent. She is delighted. Currently, she is paying £400 a month just to live in a tiny, one-bedroom house,” explains Rachel.

But her parents raised an eyebrow when she told them where she was planning to buy. This is not a salubrious part of town. Roughly four out of every 10 houses are boarded up (current asking prices £25,000-£40,000).

“Two things have hit this area hard,” says Zainul Pirmohamed, project manager for Stoke’s £1 House scheme. “Many industries have closed down, and a lot of people have moved to the edges of town. House prices have fallen, so investors have bought cheaply, and rented homes out to a transient population, who have no interest in creating a community spirit.”

For this reason, applicants in Stoke – as in Liverpool – must bring their house up to certain standards. They must also have professional or domestic connections with the city, be first-time buyers and agree to stay in their new home for at least five years.

They must not be too well-off, either. Maximum permissible earnings are £35,000 per year (£40,000 if they have children). The council initially put a £1 price tag on 33 houses. Six hundred people expressed interest, though only 75 sent in formal applications, and just 17 have been approved so far.

“We are being ultra-cautious in selecting participants,” adds Zainul. “The last thing we want is to take people onto the scheme and land them in financial hardship.”

Neither will the £1 buyers be making a killing. Although the buyers in Stoke will be presented with the freehold after a year, they have to give the council most of their profit if they sell (90 per cent in the first five years, 80 per cent in year six, and even 20 per cent in year nine).

The council’s guarantee of a minimum liveable standard is also not the same as a lovely, elegant home, as Rachel acknowledges. “I have a plan,” she says. “As soon as I move in, I’m going to have a big house-warming party, and invite everyone I know who is good at painting and decorating.”

A £1 property might not give you your dream home – or at least not at first. But as a way of giving hope to hard-pressed families and young people, and hopefully brightening up some of the country’s saddest spots, it is a noble experiment.